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Modification approved on rental & tenant demands free month of rent

I'm not sure if this is the right place to post this, but I was hoping to get some feedback from other people getting modifications, especially on rental homes . . .

I have a home that is being rented by a tenant for $1,850 a month. I was already in the process of pursuing a modification on this home when the tenant moved in September 2015. Because I missed payments, the house entered a foreclosure status but was active in loss mitigation which causes any sale date to be postponed. In November 2015 the tenant was informed by an outside source that the house was in a foreclosure status and he became extremely concerned. I explained that we are in a modification review and that foreclosure will not take place while we are in review. I also explained to him that I had previously acquired a modification on this home before so this was not a new process for me. (I was applying for another one in order to bring the mortgage payment closer to the rent amount.) I also showed the tenant that I have the funds necessary to reinstate the loan if the modification was denied. (Later I even showed him a check written out to the lender for the full reinstatement amount if needed.) The tenant was still concerned about being evicted from the home if a foreclosure was to occur and that he would suffer the loss of being evicted and having to move again to another place.

I know that my lease agreement with the tenant is completely independent of the mortgage agreement with the lender and that I am not legally obligated to do anything for the tenant. However, I felt concerned about the tenant and wanted to give him some kind of guarantee that I would not allow him to suffer loss. So I prepared an addendum to the lease agreement that allowed the tenant to withhold two months of rent while I pursued the modification. This is a total of $3,700. The agreement would even allow him to keep this money if the house went to foreclosure. However, it required him to pay back this money if a modification is acquired or the loan is reinstated. The tenant agreed and withheld the two months of rent for December 2015 and January 2016. He paid the rent in February.

Now the modification was approved, paperwork was processed, and payments to the lender have resumed under the new terms of the modified loan. All the missed payments were added to the principle along with late fees, legal fees, and other fess. (A total of about $20,000 was added to the principle.) I contacted the tenant to show him proof of the modification and to request that the $3,700 would now be paid back. The tenant sent me a series of text messages stating that he requires that he only have to repay one month and that he should be allowed to keep one month of rent due to the stress. In other words, he wants to be compensated $1,850 for his stress and worry. He also indicated that if I do not agree to this, then he will not pay rent for April and he is willing to be evicted. He is also bringing FALSE accusations against me of falsifying our modification paperwork and he is stating that the lender and the federal government are going to be made aware of this and there will be federal charges against me. He even mentioned “what would the college you work at think of this?” In other words, he is attempting to use blackmail even though all his accusations are false and I have all the documentation needed to prove that all the paperwork is legitimate.

So I would like to hear some feedback from others about this situation. . . .

Currently, I am not willing to submit to his terms for the following reasons.

• Legally the tenant’s lease agreement has absolutely nothing to do with the landlord’s mortgage agreement. I was not legally obligated to do anything for this tenant even from the beginning. If he was not happy, he had the right to submit a 30-day notice and leave.

• I think I was already being considerate by preparing an addendum that would allow him to withhold two months of rent until the modification was processed. This was done to supposedly relieve him of all stress because if the foreclosure happened, he would have gotten two months of free rent. If it didn’t get modified, then he would just pay the rent for the months he’s living there like any other normal rental situation.

• If the tenant wanted some kind of compensation for his stress even if the modification is approved then he should have indicated that when I prepared the addendum. He does not have the right to demand this later when the addendum was already signed and he is now required to pay back the two months of rent that were withheld.

• I already suffered loss with the modification process. My credit took the hit of 7 months of missed payments. Also late fees, legal fees, and other fees were added to the principle when the loan was modified. Why should I suffer more loss?

• I am paying for the month that he is trying to get free. All missed payments were added back to the principle. So it’s not like anything was forgiven. I did not profit anything. If I got those months forgiven then I could possibly understand why he thinks that I should allow him to enjoy one of those free months instead of charging him. However, they were not free months. It’s not money in my pocket. I owe the bank for those months. So why shouldn’t I have the right to be paid rent by a tenant who was living in that house for those months that I am paying for?

• Lastly, as a final principle: I refuse to be forced to pay someone based on demands and threats. I would have been happy to discuss a fair compensation with the tenant for his stress when the modification was approved. It was not part of the addendum but I would have still been willing to negotiate this if he did not demand it with threats, attempted blackmail and refusal to honor even the standard lease agreement. This is completely unacceptable in my opinion.

I informed him that I am not willing to discuss this matter until I receive the April rent based on the standard lease agreement. I know he intends to live there in April and therefore he must pay his April rent. Once he has made that payment, I will continue discussion. If he does not pay it, I will give him a three day notice and evict him. I will also take him to small claims court for the two months that he withheld rent and refused to repay once the modification was approved.

Any comments out there? . . . Please don’t criticize me for trying to be kind to these tenants. I knew them for over a year and trusted them. I would just like to know if I am unfair for refusing to submit to their demand and insisting on going all the way to court if needed.

Thanks!

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Anonymous

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2 years ago

WOW!
You have been very unfairly treated.

I think that you have bent over backwards for this person during a stressful time for yourself.

For the tenant previously to say he was afraid of being evicted if the house was foreclosed and then to tell you that you'll just have to evict him if you don't agree to his terms, shows that he truly never was concerned about an eviction but rather just looking for a hand out.

I say stand your ground. This may ultimately lead to an eviction, which I doubt he is not concern with. Try to see if he will agree to make payments. He obviously no longer has the money and is hoping that you will just dissolve it. If you could at least get him to pay some of it, you may be able to deduct the balance from his deposit when he moves out.